EURJPY the correction continues but upsides might be limited. The pair is currently trading higher for the 3rd consecutive session, but Wednesday’s gains are limited by the presence of the 158.60 resistance level. The currency pair started this week on a dull note as traders turned to safe havens post-attack in Israel. Later the pair regained momentum after dovish remarks from the FED officials appear to have dampened the mood on the Yen. Interesting that at the same time, the euro recovered from the earlier losses on broad dollar weakness.
Euro and Yen weekly fundamental forecast
Moving ahead, the movement of the US dollar is likely to significantly affect both Euro and Yen. The US CPI data is the key release for the dollar, which will provide hints to the Federal Reserve`s plans for future monetary tightening.
For the Euro, the ECB monetary policy meeting minutes for the September meeting arrive later Thursday. Early this week, a number of ECB Officials have indicated that the central bank may not have to tighten monetary policy as much as initially expected. European Central Bank (ECB) Governing Council member Francois Villeroy de Galhau, said on Tuesday that “at this stage further rate hikes not the right thing to do.” For the Yen, it is important to note that the pair is very sensitive to risk appetite. Therefore, investors should closely monitor the conflict between Israel and Palestinian Islamic Group Hamas.
EURJPY technical analysis & forecast
The technical outlook shows that the price is still trading within the rising channel on the daily chart, although price action within the channel has started to form a plateau. Looking at the 4-hour chart, the pair was able to clear the 158.50 level, but the upside momentum is presently limited. The overall sentiment on the pair remains mixed, and any gains are merely rallies that could bring up better areas to short the pair. If the pair faces rejection in the red areas on the chart, renewed selling will ultimately target 156.50 (Monday's low). If there is a move below 156.50, the pair could dive toward 156. Any more losses might send the pair toward the 155 level.
On the flip side, EURJPY bulls need to surpass the 159.80/160 resistance areas to sustain their bullish momentum. However, my short-term prediction will remain bearish as long as it trades below 160 regions. Only a reclaim of this region will flip it bullish on the higher timeframe.
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